Rock-Bottom TikTok Shop Prices Could Disappear as Seller Fee Hikes Take Effect

263 0 0

TikTok Shop offers a seemingly endless stream of ultra-cheap tchotchkes—sneakers for $6.59, a PlayStation 5 controller charger for $8, a 12-pack of makeup sponges for $1.79—but prices are likely to rise after a new increase in seller fees.

As of April 1, TikTok will take 6% of an item’s sale price from vendors, up from 2% most recently and 0% when TikTok Shop launched in fall 2023. Next, the fees will rise to 8% on July 1, 2024.

“To support you through this transition, TikTok Shop will increase the referral fee in increments,” TikTok says. “This transition period aims to ease the adjustment for all our valued sellers, ensuring a smoother integration into the updated fee structure.”

Sellers will now be faced with a choice. They can either increase prices to cover the new costs, or they can absorb the fees to stay competitive. Even if they opt for the latter, the fees could still be lower than competitors like Etsy and Amazon, which charges sellers 8-20% depending on the product category.

Amazon lowered its seller fees for clothing under $15 from 17% to 5% in December to compete with China-based Temu and Shein, which are attracting US customers despite ethical concerns over improper labor practices and copyright infringement. Shein surpassed Amazon as the most downloaded app in July 2022. Temu took out no less than three Super Bowl ads this year.

But as one of the most popular social media platforms, TikTok has an unparalleled audience of consumers who could help it win. TikTok creators can list items for sale along with their videos, as well as promote other brands’ content for a commission fee.

TikTok creators argue that the US proposal to ban the platform would harm their small businesses, the Associated Press reports, by taking away what they see as an effective platform for both selling goods on the platform and promoting their businesses overall.